I’ve heard that in many states it’s legal for a company to take out a life insurance policy on you without you or your families knowledge. And when you die the company can collect.

This isn’t limited to CEO’s and other valuable employees whom if the company lost the company would experience a hardship. I’ve heard of a case where a convenience store owner was setting up life insurance policies on his cashiers and expecting to receive a $150,000.00 check if the employee was killed. This employer cashed in when the man died even long after the employee was no longer working for him. Apparently his family found out about the policy and won a court battle to receive the funds. But think about all of the policies where the families didn't find out.

Does it disturb you to know that the company that you work for, or one that you may have worked for in the past may be able to take out a life insurance policy on you without your knowledge, and cash in upon your death?

I find it unlikely that a company can legally insure someone like a clerk for a great deal of money, or that they can collect after the proposed insured's employment has terminated. Most states only allow non-family members to insure someone if they have an "insurable interest" in that person and most states require that the insured is aware of the policy as well. There are such policies as "partnership insurance" and "key employee insurance" but a convenience store clerk is unlikely to qualify as a "key employee."

This was not always the case, however, and there is at least one murder tied to an insurance policy taken out on a very heavy drinker, who, unfortunately for the men taking the policy out, had an incredible constitution.

Michael Malloy was a vagrant in New York City, in the early 20th century. He is solely known for his constitution, rivalled only by that of Rasputin. It is said that 30 attempts were made to murder him, all unsuccessful but the final one.

The events that lead to Malloy's celebrity began in January 1933. He was at the time an alcoholic, and a bum. Five men who were acquainted with him, Tony Marino, Joseph Murphy, Francis Pasqua, Hershey Green, and Daniel Kriesburg (later dubbed "the Murder Trust" by the headlines), plotted to take out three life insurance policies on Malloy, and then get him to drink himself to death. The first part of the plot was successful, and (probably with the aid of a corrupt insurance agent) they stood to gain over $3,500 if Malloy died an accidental death.

Marino owned a speakeasy, and gave Malloy unlimited credit, thinking it would soon put an end to him. It didn't; Malloy was in danger of drinking the bar into bankruptcy. Antifreeze, a deadly poison, was substituted for liquor, but still Malloy would drink until he passed out, wake up, and come back for more. Antifreeze was substituted with turpentine, followed by horse liniment, and finally mixed in rat poison. Still Malloy flourished. The gang began to get creative, thinking raw oysters soaked in wood alcohol would do the trick (this idea apparently came from Pasqua, who saw a man die after eating oysters with whiskey, which was probably an anomaly). Then came a sandwich of soiled sardines, carpet tacks, and metal shavings (none of which would likely lead to death in any case).

Realizing it was unlikely that anything Malloy ingested was likely to kill him, the Murder Trust decided to freeze him to death. On a night when temperatures reached -14 degrees Fahrenheit, Malloy drank until he passed out, was carried to a park, dumped in the snow, and had five gallons of water poured on his bare chest. (The gang had used a similar method on their first victim the previous year.) Nevertheless, Malloy reappeared the following day for his drink. The next attempt on his life came when they hit him with Green's taxi, moving at 45 miles per hour. This put Malloy in the hospital for three weeks. The gang presumed he was dead, but were unable to collect the policy on him. When he again appeared at the bar, they finally decided to take a more direct approach. On February 22, after he passed out for the night, they took him to Murphy's room, put a hose in his mouth that was connected to the gas jet, and turned it on. This finally killed Michael Malloy.

Eventually police heard the rumors of what they did, and upon learning that a Michael Malloy had died that night, they had the body exhumed. When they discovered the actual cause of death, the five men were put on trial for murder. Green went to prison and the other four members were executed in the electric chair at Sing Sing. - Wikipedia

Key Employee Insurance

And I would be very surprised to see any legitimate insurer underwrite a policy on a clerk! That company actually deserves to take a loss on account of its stupidity.